Skip to main content

Full text of "D208193832"

See other formats


NOTICE  OF  CONFIDENTIALITY  RIGHTS:  IF  YOU  ARE  A  NATURAL  PERSON,  YOU  MAY 
-  REMOVE  OR  STRIKE  ANY  OF  THE  FOLLOWING  INFORMATION  FROM  THIS  INSTRUMENT 
BEFORE  IT  IS  FILED  FOR  RECORD  IN  THE  PUBLIC  RECORDS:  YOUR  SOCIAL  SECURITY 
NUMBER  OR  YOUR  DRIVER'S  LICENSE  NUMBER. 

NO  SURFACE  USE  OIL  AND  GAS  LEASE 

This  NO  SURFACE  USE  OIL  AND  GAS  LEASE  ("Lease!  is  made  as  of  the  day  of  2008, 

(the  "Effective  Date")  by  and  between      <Z.    L  e  c  -V      C  .     Fx  \     e     m     G.  ^  A      I  a.  -a  ^  r  nx.     r^,  1_  ^  <r  r/, 

 H  ^     ^  a  a  A       Ct  i  •  •  •--   - 

as  Lessor  ("Lessor,"  whether  .one  or  more),  whose  address 

is        ! '  ?  U;  r  c  o      ?' '  -       rV    r         t\A    ,    1  y        ~?  (*C(;<  *>  .     and  Dale 

Property  Services,  L.L.C.,  ,  ("Lessee,"  whether  one  or  more),  whose  address  is  2100  Ross  Avenue,  Suite  1870,  LB-9,  Dallas,  TX 
75201 .  Lessor  and  Lessee  are  sometimes  collectively  referred  to  in  this  Lease  as  the  "Parties." 

1.  Leased  Premises.  Lessor,  in  consideration  of  a  cash  bonus  in  hand  paid  by  Lessee,  the  royalties  herein  provided, 
and  the  covenants,  agreements  and  obligations  of  Lessee  herein  contained,  and  subject  to  the  conditions  and 
limitations  hereinafter  set  forth,  hereby  leases  and  lets,  exclusively  unto  Lessee,  for  the  purpose  of  exploring,  drilling 
for,  producing,  and  marketing  oil  and  gas,  the  land  in  Tarrant  County,  Texas,  described  in  Exhibit  A  attached  hereto 
and  incorporated  herein  by  reference  (and  referred  to  herein  as  "Said  Land,"  the  "Property,"  or  the  "Leased 
Premises").  The  Leased  Premises  shall  include  all  strips  and  gores,  streets,  easements,  highways  and  alleyways 
adjacent  thereto.  Lessor  agrees  to  execute  at  Lessee's  request  any  additional  or  supplemental  instruments  reasonably 
necessary  for  a  more  complete  or  accurate  description  of  the  leased  premises.  For  the  purpose  of  determining  the 
amount  of  any  shut-in  royalties  hereunder,  the  number  of  gross  acres  specified  on  Exhibit  A  shall  be  deemed  correct, 
whether  actually  more  or  less. 

2.  Term.  Subject  to  the  other  provisions  contained  herein,  this  Lease  shall  be  for  a  term  of  thirty-six  (36)  months  from 
the  date  hereof  (the  "primary  term"),  and  for  as  long  thereafter  as  oil  or  gas  or  other  substances  covered  hereby  are 
produced  in  paying  quantities  from  the  Leased  Premises  or  from  lands  pooled  therewith,  or  this  Lease  is  otherwise 
maintained  in  effect  pursuant  to  the  provisions  hereof. 

3.  Option  Clause.  Notwithstanding  anything  to  the  contrary  herein,  Lessee  is  hereby  granted  the  exclusive  option,  to  be 
exercised  prior  to  the  date  which  this  Lease  or  any  portion  thereof  would  expire  in  accordance  with  its  terms  and 
provisions,  of  extending  this  Lease  for  an  additional  period  of  two  (2)  years  as  to  all  or  any  portion  of  the  acreage  of  the 
Leased  Premises.  The  only  action  required  by  Lessee  to  exercise  this  option  being  payment  to  Lessor  of  an  additional 
consideration  of  the  sum  equal  to  the  original  cash  bonus  paid  to  Lessor  as  a  bonus  for  signing  the  Lease,  which 
payment  shall  cover  the  entire  two  (2)  year  extended  primary  term.  Should  this  option  be  exercised  as  herein  provided, 
it  shall  be  considered  for  all  purposes  as  though  this  Lease  originally  provided  for  a  primary  term  of  five  (5)  years.  If 
this  Lease  is  extended  as  to  only  a  portion  of  the  acreage  then  covered  thereby,  Lessee  shall  designate  such  portion  by 
a  recordable  instrument. 

4.  Minerals  Covered.  For  purposes  of  this  Lease,  "oil  and  gas"  means  oil,  gas  and  other  liquid  and  gaseous 
hydrocarbons  and  their  constituent  elements  produced  through  a  well  bore.  "Oil"  includes  all  condensate,  distillate  and 
other  liquid  and  gaseous  hydrocarbons  produced  through  a  well  bore.  "Gas"  includes  helium,  carbon  dioxide  and  other 
commercial  gases,  as  well  as  hydrocarbon  gases.  Expressly  excluded  from  this  Lease  are  lignite,  coal,  sulfur  and  other 
like  minerals.  Lessee  shall  have  no  rights  to  water  in,  on,  or  under  lands  of  Lessor. 

5.  Royalty.  Royalties  on  oil,  gas  and  other  substances  produced  and  saved  hereunder  shall  be  paid  by  Lessee  to 
Lessor  as  follows:  (a)  for  oil  and  other  liquid  hydrocarbons  separated  at  Lessee's  separator  facilities,  the  royalty  shall 
be  twenty  five  percent  (25%)  of  such  production,  to  be  delivered  at  Lessee's  option  to  Lessor  at  the  wellhead  or  to 
Lessor's  credit  at  the  oil  purchaser's  transportation  facilities,  provided  that  Lessee  shall  have  the  continuing  right  to 
purchase  such  production  at  the  wellhead  market  price  then  prevailing  in  the  same  field  (or  if  there  is  no  such  price 
then  prevailing  in  the  same  field,  then  in  the  nearest  field  in  which  there  is  such  a  prevailing  price)  for  production  of 
similar  grade  and  gravity;  and  (b)  for  gas  (including  casinghead  gas)  and  all  other  substances  covered  hereby,  the 
royalty  shall  be  twenty  five  percent  (25%)  of  the  proceeds  realized  by  Lessee  from  the  sale  thereof,  computed  at  the 
point  of  sale,  provided  that  Lessee  shall  have  the  continuing  right  to  purchase  such  production  at  the  prevailing 
wellhead  market  price  paid  for  production  of  similar  quality  in  the  same  field  (or  if  there  is  no  such  price  then  prevailing 
in  the  same  field,  then  in  the  nearest  field  in  which  there  is  such  a  prevailing  price)  pursuant  to  comparable  purchase 
contracts  entered  into  on  the  same  or  nearest  preceding  date  as  the  date  on  which  Lessee  commences  its  purchases 
hereunder 

Royalties  on  oil,  gas  and  other  substances  produced  and  saved  hereunder  which  are  processed  in  a  processing  plant 
in  which  Lessee,  or  an  affiliate  of  Lessee,  has  a  direct  or  indirect  interest,  shall  be  calculated  based  upon  the  highest  of 
the  proceeds  received  or  the  market  value  of  the  products  so  processed.  Similarly,  on  oil,  gas  and  other  substance 
produced  and  saved  hereunder  which  are  sold  to  Lessee,  or  an  affiliate  of  Lessee,  royalties  shall  be  paid  based  upon 
the  higher  of  the  market  value  of  the  products  so  sold  and  the  proceeds  received  by  Lessee  for  said  products. 
Notwithstanding  anything  to  the  contrary  herein,  in  no  event  shall  any  of  Lessor's  royalty  bear  any  part  of  the  costs  of 
production  or  any  post-production  costs,  including  costs  of  lifting,  gathering  dehydration,  compression,  separation, 
delivery,  transportation,  manufacture,  processing,  treating  or  marketing,  or  for  construction,  operation  or  depreciation  of 
any  plant  or  other  facility  or  equipment  for  processing  or  treating  oil  or  gas  produced  from  the  leased  premises  or  lands 
pooled  therewith.  In  no  event  shall  Lessor  receive  a  price  less  than  Lessee  in  sales  to  nonaffiliates.  However,  any 
additional  transportation  cost  for  transporting  oil,  gas  or  other  products  to  a  point  of  sale  other  than  the  first  interconnect 
with  a  non-affiliated  third  party  which  results  in  enhancing  the  value  of  the  marketable  oil,  gas  or  other  products  to 
receive  a  better  price  may  be  deducted  pro  rata  from  Lessor's  share  of' production  as  long  as  they  are  based  on 
Lessee's  actual  transportation  cost.  In  no  event  shall  Lessor  receive  a  price  that  is  less  than,  or  more  than,  the  price 
received  by  Lessee  from  that  purchaser.  It  is  the  intent  of  the  parties  that  the  provisions  of  this  section  are  to  be  fully 
effective  and  enforceable  and  are  not  to  be  construed  as  "surplusage"  under  the  principles  set  forth  in  Heritage 
Resources  v.  NationsBank.  939  S.W.2d  1 18  (Tex.  1997). 


Page  1  of  6 


As  used  herein,  "affiliate"  means  (i)  a  corporation,  joint  venture,  partnership  or  other  entity  that  owns  more  than  ten 
percent  (10%)  of  the  outstanding  voting  interest  of  Lessee  or  in  which  Lessee  owns  more  than  ten  percent  (10%)  of  the 
outstanding  voting  interest;  or  (ii)  a  corporation,  joint  venture,  partnership  or  other  entity  in  which,  together  with  Lessee 
more  than  ten  percent  (10%)  of  the  outstanding  voting  interest  of  both  the  Lessee  and  the  other  corporation,  joint 
venture  partnership  or  other  entity  is  owned  or  controlled  by  the  same  person  or  group  of  persons. 

Lessee  must  disburse  or  cause  to  be  disbursed  to  Lessor  its  royalty  on  production  from  a  particular  well  not  later  than 
one  hundred  twenty  (120)  days  after  the  end  of  the  month  following  first  delivery  of  gas  from  the  well  into  the  pipeline. 
Thereafter,  Lessee  must  disburse  or  cause  to  be  disbursed  to  Lessor  by  the  last  day  of  each  month  its  royalty  on 
production  for  which  Lessee  received  payment  in  the  preceding  month,  but  in  no  event  shall  royalty  be  paid  more  than 
sixty  (60)  days  after  the  last  day  of  the  month  of  production.  If  not  paid  when  due,  Lessor's  royalty  shad  bear  interest  at 
the  maximum  lawful  rate  from  due  date  until  paid,  which  amount  Lessee  agrees  to  pay.  Acceptance  by  Lessor  of 
royalties  that  are  past  due  shall  not  act  as  a  waiver  or  estoppel  of  its  right  to  receive  interest  due  thereon  unless  Lessor 
expressly  so  provides  in  writing  signed  by  Lessor. 

The  receipt  by  Lessee,  or  Lessee's  operator,  from  a  purchaser  or  a  pipeline  company  of  proceeds  of  production  for 
distribution  to  Lessor  will  not  result  in  Lessee,  or  Lessee's  operator,  acquiring  legal  or  equitable  title  to  those  proceeds, 
but  Lessee,  or  Lessee's  operator,  will  at  all  times  hold  the  proceeds  in  trust  for  the  benefit  of  Lessor.  Notwithstanding 
the  insolvency,  bankruptcy,  or  other  business  failure  of  a  purchaser  of  production  from  Said  Land  or  pipeline  company 
transporting  production  from  Said  Land,  Lessee  will  remain  liable  for  payment  to  Lessor  for,  and  agrees  to  pay  Lessor 
all  royalties  due  Lessor  together  with  interest  if  not  timely  paid.  Lessor  retains  the  right  to  terminate  the  Lease  for 
failure  to  pay  royalties,  after  a  period  of  written  notice  and  opportunity  to  cure  which  shall  not  exceed  sixty  (60)  days. 

Gas  produced  from  Said  Land  or  pooled  unit  that  Said  Land  is  included  therewith  shall  not  be  commingled  with  gas 
produced  from  any  other  lands  prior  to  the  point  where  the  gas  produced  from  this  Lease  passes  through  the  meter 
which  will  measure  the  gas  for  calculating  the  payment  made  by  the  purchaser  of  gas  production. 

6.  Shut-in  Royalty.  If  at  the  end  of  the  primary  term  or  any  time  thereafter  one  or  more  wells  on  the  leased  premises  or 
lands  pooled  therewith  are  capable  of  producing  oil  or  gas  or  other  substances  covered  hereby  in  paying  quantities,  but 
such  well  or  wells  are  either  shut-in  or  production  therefrom  is  not  being  sold  by  Lessee,  such  well  or  wells  shall 
nevertheless  be  deemed  to  be  producing  in  paying  quantities  for  the  purpose  of  maintaining  this  Lease.  A  well  that  has 
been  drilled  but  not  traced  shall  be  deemed  incapable  of  producing  in  paying  quantities.  If  for  a  period  of  ninety  (90) 
consecutive  days  such  well  or  wells  are  shut-in  or  production  therefrom  is  not  being  sold  by  Lessee,  then  Lessee  shall 
pay  shut-in  royalty  of  twenty  five  dollars  ($25.00)  per  acre  then  covered  by  this  Lease  on  or  before  the  end  of  said  90- 
day  period  and  thereafter  on  or  before  each  anniversary  of  the  end  of  said  90-day  period  while  the  well  or  wells  are 
shut-in  or  production  therefrom  is  not  being  sold  by  Lessee;  provided,  however,  that  if  this  Lease  is  otherwise  being 
maintained  by  operations,  or  if  production  is  being  sold  by  Lessee  from  another  well  or  wells  on  the  leased  premises  or 
lands  pooled  therewith,  no  shut-in  royalty  shall  be  due  untii  the  end  of  the  90-day  period  next  following  cessation  of 
such  operations  or  production.  Notwithstanding  anything  to  the  contrary  herein,  it  is  expressly  understood  and  agreed 
that  after  the  expiration  of  the  primary  term,  Lessee  shall  not  have  the  right  to  continue  this  Lease  in  force  by  payment 
of  shut-in  royalty  for  more  than  one  single  period  of  up  to  two  (2)  consecutive  years. 

7.  Payments.  All  shut-in  or  other  royalty  payments  under  this  Lease  shall  be  paid  or  tendered  to  Lessor  at  the  address 
in  Exhibit  A  attached  hereto,  or  at  such  address  or  to  Lessor's  credit  at  such  depository  institution  as  Lessor  may 
provide  written  notice  of  from  time  to  time.  All  payments  or  tenders  may  be  made  by  check  or  electronic  transfer. 

8.  Continuous  Drilling  Obligations.  If  Lessee  drills  a  well  which  is  incapable  of  producing  in  paying  quantities  (a  "dry 
hole")  on  the  Leased  Premises  or  lands  pooled  therewith,  or  if  all  production  (whether  or  not  in  paying  quantities) 
permanently  ceases  from  any  cause,  including  a  revision  of  unit  boundaries  pursuant  to  the  provisions  of  Section  9  or 
the  action  of  any  governmental  authority,  then  in  the  event  this  Lease  is  not  otherwise  being  maintained  in  force  it  shall 
nevertheless  remain  in  force  if  Lessee  commences  operations  for  reworking  an  existing  well  or  for  drilling  an  additional 
well  or  for  otherwise  obtaining  or  restoring  production  on  the  Leased  Premises  or  lands  pooled  therewith  within  ninety 
(90)  days  after  completion  of  operations  on  such  dry  hole  or  within  ninety  (90)  days  after  such  cessation  of  all 
production.  If  at  the  end  of  the  primary  term,  or  at  any  time  thereafter,  this  Lease  is  not  otherwise  being  maintained  in 
force  but  Lessee  is  then  engaged  in  drilling,  reworking  or  any  other  operations  reasonably  calculated  to  obtain  or 
restore  production  therefrom,  this  Lease  shall  remain  in  force  so  long  as  any  one  or  more  of  such  operations  are 
prosecuted  with  no  cessation  of  more  than  ninety  (90)  consecutive  days,  and  if  any  such  operations  results  in  the 
production  of  oil  or  gas  or  other  substances  covered  hereby,  as  long  thereafter  as  there  is  production  in  paying 
quantities  from  the  Leased  Premises  or  lands  pooled  therewith.  After  completion  of  a  well  capable  of  producing  in 
paying  quantities  hereunder,  Lessee  shall  drill  such  additional  wells  on  the  Leased  Premises  or  lands  pooled  therewith 
as  a  reasonably  prudent  operator  would  drill  under  the  same  or  similar  circumstances  (a)  to  develop  the  Leased 
Premises  as  to  formations  then  capable  of  producing  in  paying  quantities  on  the  Leased  Premises  or  Jands  pooled 
therewith,  or  (b)  to  protect  the  Leased  Premises  from  uncompensated  drainage  by  any  well  or  wells  located  on  other 
lands  not  pooled  therewith.  There  shall  be  no  covenant  to  drill  exploratory  wells  or  any  additional  wells  except  as 
expressly  provided  herein. 

9.  Pooling.  Lessee  shall  have  the  right  but  not  the  obligation  to  pool  all  or  any  part  of  the  Leased  Premises  or  interests 
therein  with  any  other  lands  or  interests,  and  as  to  any  or  all  substances  covered  by  this  lease,  either  before  or  after  the 
commencement  of  production,  whenever  Lessee  deems  it  necessary  or  proper  to  do  so  in  order  to  prudently  develop  or 
operate  the  Leased  Premises,  whether  or  not  similar  pooling  authority  exists  with  respect  to  such  other  lands  or 
interests;  provided,  however,  that  the  entire  Leased  Premises  covered  by  this  Lease,  shall  be  included  in  any  unit 
created  pursuant  to  the  pooling  authority  granted  herein.  The  unit  formed  by  such  pooling  for  an  oil  well  which  is  not  a 
horizontal  completion  shall  not  exceed  eighty  (80)  acres  plus  a  maximum  acreage  tolerance  often  percent  (10%)  and 
for  a  gas  well  or  a  horizontal  completion  shall  not  exceed  six  hundred  forty  (640)  acres  plus  a  maximum  acreage 
tolerance  of  ten  percent  (10%).  For  the  purpose  of  the  foregoing,  the  terms  "oil  well"  and  "gas  well"  shall  have  the 
meanings  prescribed  by  applicable  law  or  the  appropriate  governmental  authority,  or  if  no  definition  is  so  prescribed, 
"oil  well"  means  a  well  with  an  initial  gas-oil  ratio  of  less  than  1 00,000  cubic  feet  per  barrel  and  "gas  well"  means  a  well 
with  an  initial  gas-oil  ratio  of  100,000  cubic  feet  or  more  per  barrel,  based  on  24-hour  production  test  conducted  under 


Page  2  of 6 


normal  producing  conditions  using  standard  lease  separator  facilities  or  equivalent  testing  equipment  and  "horizontal 
completion"  means  a  well  in  which  the  horizontal  component  of  the  gross  interval  in  the  reservoir  exceeds  the  vertical 
component  thereof.  In  exercising  its  pooling  rights  hereunder,  within  ninety  (90)  days  of  first  production,  Lessee  shall 
file  of  record  a  written  declaration  describing  the  unit  and  stating  the  effective  date  of  pooling  which  may  be  retroactive 
to  first  production.  In  the  event  Lessor's  acreage  is  included  in  a  well,  all  of  Lessor's  acreage  shall  be  included. 
Production,  drilling  or  reworking  operations  anywhere  on  a  unit  which  includes  the  leased  premises  shall  be  treated  as 
if  it  were  production,  drilling  or  reworking  operations  on  the  leased  premises,  except  that  the  production  on  which 
Lessor's  royalty  is  calculated  shall  be  that  proportion  of  the  total  unit  production  which  the  mineral  acres  covered  by  this 
Lease  and  included  in  the  unit  bears  to  the  tota)  number  of  mineral  acres  included  in  the  unit. 

Pooling  in  one  or  more  instances  shall  not  exhaust  Lessee's  pooling  rights  hereunder,  and  Lessee  shall  have  the 
recurring  right  but  not  the  obligation  to  revise  any  unit  formed  hereunder  by  expansion  or  contraction  or  both,  either 
before  or  after  commencement  of  production,  in  order  to  conform  to  the  well  spacing  or  density  pattern  prescribed  or 
permitted  by  the  governmental  authority  having  jurisdiction,  or  to  conform  to  any  productive  acreage  determination 
made  by  such  governmental  authority.  In  making  such  a  revision,  Lessee  shalt  file  of  record  a  written  declaration 
describing  the  revised  unit  and  stating  the  effective  date  of  revision.  If  the  leased  premises  are  included  in  or  excluded 
from  the  unit  by  virtue  of  such  revision,  the  proportion  of  unit  production  on  which  royalties  are  payable  hereunder  shall 
thereafter  be  adjusted  accordingly.  In  the  absence  of  production  in  paying  quantities  from  a  unit,  or  upon  permanent 
cessation  thereof,  Lessee  may  terminate  the  unit  by  filing  of  record  a  written  declaration  describing  the  unit  and  stating 
the  date  of  termination  Pooling  hereunder  shall  not  constitute  a  cross-conveyance  of  interests. 

10.  Assignment.  The  interest  of  either  Lessor  or  Lessee  hereunder  may  be  assigned,  devised  or  otherwise  transferred 
in  whole  or  in  part,  by  area  and/or  by  depth  or  zone,  and  the  rights  and  obligations  of  the  parties  hereunder  shall  extend 
to  their  respective  heirs,  devisees,  executors,  administrators,  successors  and  assigns;  provided,  however,  if  Lessee  is 
to  assign  any  part  of  this  Lease  it  shall  give  written  notice  and  a  copy  of  any  assignment  to  the  Lessor  within  sixty  (60) 
days  of  assignment  with  the  exception  of  assignments  being  made  to  Chesapeake  Exploration,  LP.,  its  officers, 
directors,  and/or  affiliates.  No  change  in  Lessor's  ownership  shall  have  the  effect  of  reducing  the  rights  or  enlarging  the 
obligations  of  Lessee  hereunder,  and  no  change  in  ownership  shall  be  binding  on  Lessee  until  thirty  (30)  days  after 
Lessee  has  been  furnished  the  original  or  certified  or  duly  authenticated  copies  of  the  documents  establishing  such 
change  of  ownership  to  the  reasonable  satisfaction  of  Lessee  or  until  Lessor  has  satisfied  the  notification  requirements 
contained  in  Lessee's  usual  form  of  division  order. 

11.  Release  and  Vertical  Pugh  Clause.  Lessee  may,  at  any  time  and  from  time  to  time,  deliver  to  Lessor  a  file  of 
record  written  release  of  this  Lease  as  to  a  full  or  undivided  interest  in  all  or  any  portion  of  the  area  covered  by  this 
Lease  or  any  depths  or  zones  thereunder,  and  shall  thereupon  be  relieved  of  all  obligations  thereafter  arising  with 
respect  to  the  interest  so  released.  If  Lessee  releases  all  or  an  undivided  interest  in  less  than  all  of  the  area  covered 
hereby,  Lessee's  obligation  to  pay  or  tender  shut-in  royalties  shall  be  proportionately  reduced  in  accordance  with  the 
net  acreage  interest  retained  hereunder,  fn  any  event,  upon  termination  of  this  Lease,  Lessee,  its  successors  or 
assigns  shall  deliver  to  Lessor  a  recorded  release  within  sixty  (60)  days  as  to  such  portion  or  portions  of  this  Lease 
which  have  terminated  under  the  terms  of  this  Lease.  Upon  the  expiration  of  the  primary  term  of  this  Lease,  upon  the 
expiration  of  any  extension  or  renewal  of  the  primary  term,  or  after  cessation  of  operations  as  provided  herein, 
whichever  occurs  last,  this  Lease  shall  terminate  as  to  all  rights  lying  below  one  hundred  feet  (100')  below  either  (1)  the 
deepest  depth  drilled  in  any  well  drilled  on  the  leased  premises  or  on  lands  pooled  therewith  or  (2)  the  stratigraphic 
equivalent  of  the  base  of  the  Barnett  Shale  formation  producing  or  capable  of  producing  in  any  well  drilled  on  the 
leased  premises  or  on  lands  pooled  therewith,  whichever  is  the  deepest;  provided,  however,  if  Lessee  is  then  engaged 
in  operations  on  the  leased  premises  or  on  lands  pooled  therewith,  this  Lease  shall  remain  in  full  force  and  effect  as  to 
all  depths  so  long  as  no  more  than  ninety  (90)  days  elapse  between  operations. 

12.  No  Surface  Use.  Notwithstanding  anything  to  the  contrary  in  this  Lease,  Lessee  shall  not  enter  upon  the  surface 
of,  cross  over,  place  any  structure  or  building  upon  or  conduct  any  operations  (including  but  not  limited  to 
geophysical/seismic  operations)  on  the  Leased  Premises  or  within  three  hundred  feet  (300')  of  the  Leased  Premises  or 
any  other  residential  structure  located  within  the  same  subdivision  or  neighborhood  addition  as  the  Leased  Premises. 
Lessee  shall  only  develop  the  leased  premises  by  pooling,  as  provided  herein,  or  by  directional  or  horizontal  drilling 
commenced  from  a  surface  location  on  other  lands.  Notwithstanding  anything  to  the  contrary  in  the  Lease,  Lessee  has 
no  right  to  drill  horizontally,  vertically,  or  at  an  angle  under  the  Leased  Premises  at  any  depth  that  less  than  three 
hundred  (300)  feet  below  the  surface.  Lessee  has  no  right  to  pipe,  transmit,  or  transport  gas  under  the  Leased 
Premises  at  any  depth  that  is  less  than  three  hundred  (300)  feet  below  the  surface.  Lessee  shall  make  all  reasonable 
efforts  not  to  use  residential  or  neighborhood  streets  or  thoroughfares  in  developing  the  Leased  Premises,  any  lands 
pooled  therewith  or  otherwise. 

13.  Noise.  Noise  levels  associated  with  Lessee's  operations  related  to  the  drilling,  completion  and  reworking  of  wells 
shall  be  kept  to  a  reasonable  minimum,  taking  into  consideration  reasonably  available  equipment  and  technology  in  the 
oil  and  gas  industry,  the  level  and  nature  of  development  and  surface  use  elsewhere  in  the  vicinity  of  Lessee's  drill  sites 
and  the  fact  Lessee's  operations  are  being  conducted  in  or  near  an  urban  residential  area.  If  Lessee  utilizes  any  non- 
electric-powered equipment  in  its  operations,  Lessee  shall  take  reasonable  steps  to  muffle  the  sound  therefrom  by 
installing  a  noise  suppression  muffler  or  like  equipment. 

14.  Regulatory  Requirements  and  Force  Majeure.  Lessee's  obligations  under  this  Lease,  whether  express  or  implied, 
shall  be  subject  to  all  applicable  laws,  rules,  regulations  and  orders  of  any  governmental  authority  having  jurisdiction, 
including  environmental  regulations,  setback  requirements,  restrictions  on  the  drilling  and  production  of  wells,  and  the 
price  of  oil,  gas  and  other  substances  covered  hereby.  To  the  extent  any  such  laws,  rules,  regulations  or  orders  are 
less  restrictive  than  the  terms  of  this  Lease,  this  Lease  shall  control.  The  breach  of  this  paragraph  will  be  considered  a 
material  breach  of  the  Lease.  When  drilling,  reworking,  production  or  other  operations  are  prevented  or  delayed  by 
such  laws,  rules,  regulations  or  orders,  or  by  inability  to  obtain  necessary  permits,  equipment,  services,  material,  water, 
electricity,  fuel,  access  or  easements,  or  by  fire,  flood,  adverse  weather  conditions,  war,  sabotage,  rebellion, 
insurrection,  riot,  strike  or  labor  disputes,  or  by  inability  to  obtain  a  satisfactory  market  for  production  or  failure  of 
purchasers  or  carriers  to  take  or  transport  such  production,  or  by  any  other  cause  not  reasonably  within  Lessee's 
control,  this  Lease  shall  not  terminate  because  of  such  prevention  or  delay.  Lessee  shall  not  be  liable  for  breach  of 


Page  3  of  6 


any  express  or  implied  covenants  of  this  Lease  when  drilling,  production  or  other  operations  are  so  prevented,  delayed 
or  interrupted.  Lessee  shall  take  all  reasonable  actions  to  remove  or  end  any  cause  of  force  majeure  as  soon  as 
reasonably  possible.  In  no  event  shall  this  Lease  be  perpetuated  by  an  event  of  force  majeure  for  a  period  of  more 
than  one  (1)  consecutive  year  or  three  (3)  years  of  cumulative  time.  No  obligation  of  Lessee  to  pay  money  that  has 
accrued  and  was  due  before  the  Force  Majeure  event  occurred  under  this  lease  will  be  excused  or  delayed  by  reason 
of  such  Force  Majeure  event. 

15.  Environmental  Compliance-  Lessee  shall  use  the  highest  degree  of  care  and  all  reasonable  safeguards  to  prevent 
contamination  or  pollution  of  any  environmental  medium,  including  soil,  surface  waters,  groundwater,  sediments,  and 
surface  or  subsurface  strata,  ambient  air  or  any  other  environmental  medium  in,  on,  or  under,  Said  Lands  or  lands 
pooled  therewith,  by  any  waste,  pollutant,  or  contaminant.  Lessee  shall  not  bring  or  permit  to  remain  on  Said  Lands  or 
lands  pooled  therewith  any  asbestos  containing  materials,  explosives,  toxic  materials,  or  substances  regulated  as 
hazardous  wastes,  hazardous  materials,  hazardous  substances  (as  the  term  "Hazardous  Substance"  is  defined  in  the 
Comprehensive  Environmental  Response  Compensation  and  Liability  Act  (CERCLA),  42  U.S.  C.  Sections  9601,  et 
seq.)  or  toxic  substances  under  any  federal,  state  or  local  law  or  regulation  ("Hazardous  Materials"),  except  ordinary 
products  commonly  used  in  connection  with  oil  and  gas  exploration  and  development  operations  and  stored  in  the 
usual  manner  and  quantities.  LESSEE'S  VIOLATION  OF  THE  FOREGOING  PROHIBITION  SHALL  CONSTITUTE  A 
MATERIAL  BREACH  AND  DEFAULT  HEREUNDER  AND  LESSEE  SHALL  INDEMNIFY,  HOLD  HARMLESS  AND 
DEFEND  LESSOR,  ITS  AGENTS,  EMPLOYEES,  TENANTS,  GUESTS,  INVITEES  AND  THEIR  RESPECTIVE 
SUCCESSORS  AND  ASSIGNS  FROM  AND  AGAINST  ANY  CLAIMS,  DAMAGES,  JUDGMENTS,  PENALTIES, 
LIABILITIES,  AND  COSTS  (INCLUDING  RE  REASONABLE  ATTORNEYS  FEES  AND  COURT  COSTS)  CAUSED  BY 
OR  ARISING  OUT  OF  (1)  A  VIOLATION  OF  THE  FOREGOING  PROHIBITION  OR  (2)  THE  PRESENCE,  RELEASE 
OR  DISPOSAL  OF  ANY  HAZARDOUS  MATERIALS  ON,  UNDER  OR  ABOUT  SAID  LANDS  OR  LANDS  POOLED 
THEREWITH  DURING  LESSEE'S  OCCUPANCY  OR  CONTROL  OF  SAME.  LESSEE  SHALL  CLEAN  UP,  REMOVE, 
REMEDY,  AND  REPAIR  ANY  SOIL  OR  GROUND  WATER  CONTAMINATION  AND  DAMAGE  CAUSED  BY  THE 
PRESENCE  OR  RELEASE  OF  ANY  HAZARDOUS  MATERIALS  IN,  ON,  UNDER  OR  ABOUT  SAID  LANDS  OR 
LANDS  POOLED  THEREWITH  DURING  LESSEE'S  OCCUPANCY  OF  SAME  IN  CONFORMANCE  WITH  THE 
REQUIREMENTS  OF  APPLICABLE  LAW.  THIS  INDEMNIFICATION  AND  ASSUMPTION  SHALL  APPLY,  BUT  IS 
NOT  LIMITED  TO,  LIABILITY  FOR  RESPONSE  ACTIONS  UNDERTAKEN  PURSUANT  TO  CERCLA  OR  ANY 
OTHER  ENVIRONMENTAL  LAW  OR  REGULATION.  LESSEE  SHALL  IMMEDIATELY  GIVE  LESSOR  WRITTEN 
NOTICE  OF  ANY  BREACH  OR  SUSPECTED  BREACH  OF  THIS  PARAGRAPH,  UPON  LEARNING  OF  THE 
PRESENCE  OF  ANY  HAZARDOUS  MATERIALS,  OR  UPON  RECEIVING  A  NOTICE  PERTAINING  TO  HAZARDOUS 
MATERIALS  WHICH  MAY  AFFECT  SAID  LANDS  OR  LANDS  POOLED  THEREWITH.  THE  OBLIGATIONS  OF 
LESSEE  HEREUNDER  SHALL  SURVIVE  THE  EXPIRATION  OR  EARLIER  TERMINATION  FOR  ANY  REASON,  OF 
THIS  LEASE. 

16.  Indemnity.  LESSEE  AGREES  TO  INDEMNIFY  AND  HOLD  HARMLESS  LESSOR,  AND  LESSOR'S 
REPRESENTATIVES,  SUCCESSORS,  AND  ASSIGNS  AGAINST  ALL  EXPENSES,  CLAIMS,  DEMANDS, 
LIABILITIES,  AND  CAUSES  OF  ACTION  OF  ANY  NATURE  FOR  INJURY  TO  OR  DEATH  OF  PERSONS  AND  LOSS 
OR  DAMAGE  TO  PROPERTY,  INCLUDING,  WITHOUT  LIMITATION,  ATTORNEY'S  FEES,  EXPERT  FEES,  AND 
COURT  COSTS,  CAUSED  BY  LESSEE'S  OPERATIONS  ON  SAID  LAND  OR  LANDS  POOLED  THEREWITH  OR 
LESSEE'S  MARKETING  OF  PRODUCTION  FROM  THE  LAND  OR  ANY  VIOLATION  OF  ANY  ENVIRONMENTAL 
REQUIREMENTS  BY  LESSEE.  AS  USED  IN  THIS  PARAGRAPH,  THE  TERM  "LESSEE"  INCLUDES  LESSEE,  ITS 
AGENTS,  EMPLOYEES,  SERVANTS,  CONTRACTORS,  AND  ANY  OTHER  PERSON  ACTING  UNDER  ITS 
DIRECTION  AND  CONTROL,  AND  ITS  INDEPENDENT  CONTRACTORS. 

17.  Notices.  All  notices  required  or  contemplated  by  this  Lease  shall  be  directed  to  the  party  being  notified  at  the 
address  identified  in  Exhibit  A,  unless  notice  of  another  address  has  been  provided  in  writing.  All  such  notices  shall  be 
made  by  registered  or  certified  mail,  return  receipt  requested,  unless  another  means  of  delivery  is  expressly  stated. 

18.  No  Warranty  of  Title.  Lessor  makes  no  warranty  of  any  kind  with  respect  to  title  to  the  surface  or  mineral  estate  in 
the  leased  premises  or  any  portion  of  or  interest  therein.  All  warranties  that  might  arise  by  common  law  or  by  statute, 
including  but  not  limited  to  Section  5.023  of  the  Texas  Property  Code  (or  its  successor),  are  excluded.  By  acceptance 
of  this  Lease,  Lessee  acknowledges  that  it  has  been  given  full  opportunity  to  investigate  and  has  conducted  sufficient 
investigation  to  satisfy  itself  as  to  the  title  to  the  leased  premises.  Lessee  assumes  all  risk  of  title  failures. 

19.  Curing  Defaults.  Should  Lessee  at  any  time  fail  to  comply  with  its  obligations  hereunder  regarding  construction, 
maintenance,  or  repair,  Lessor  shall  notify  Lessee  in  writing  its  failure  to  comply  with  such  obligations,  and  upon  such 
written  notice,  Lessee  shall  have  sixty  (60)  days  to  fulfill  its  obligations,  or,  Lessor  shall  have  the  right,  to  do  or  have 
done  whatever  is  necessary  to  fulfill  the  obligations  to  its  satisfaction,  and  Lessee  shall  be  liable  to  Lessor  for  the 
reasonable  and  necessary  expenses  thus  incurred  by  Lessor,  to  be  paid  within  60  days  after  Lessor  shall  have 
furnished  Lessee  an  itemized  written  statement  of  the  expenses. 

20.  Venue  and  Leoal  Fees.  Venue  for  any  dispute  arising  under  this  Lease  shall  lie  in  Tarrant  County,  Texas,  where 
all  obligations  under  this  Lease  are  performable.  At  any  time  that  any  obligation  of  the  Lessee  to  make  a  payment  shall 
not  be  complied  with  in  accordance  with  the  terms  of  the  Lease,  it  is  agreed  and  understood  that  Lessee  will  pay  to 
Lessor  interest  thereon  at  the  highest  lawful  rate  allowed  to  be  charged  to  Lessee  by  Lessor  under  the  then  existing 
Statutes  of  the  State  of  Texas.  In  addition,  in  the  event  of  the  breach  of  any  provision  of  the  Lease,  Lessee  shall  pay  to 
Lessor  all  costs  and  expenses  reasonably  incurred  including  reasonable  attorney's  fees  and  costs  of  court  incurred  by 
Lessor  for  the  enforcement  of  the  provisions  of  this  Lease.  It  is  agreed  and  understood  that  time  is  of  the  essence  in  the 
performing  of  each  responsibility  under  the  terms  of  this  Lease. 

21.  Records.  Lessee  shall  keep  complete  and  accurate  records  of  all  its  operations  relating  to  or  affecting  the  Leased 
Premises,  and  the  results  thereof,  including  but  not  limited  to:  all  geophysical,  geological,  geochemical  and 
paleontological  data  and  interpretations  or  analyses  thereof;  all  land  surveys,  title  opinions  and  title  curative  material;  all 
drilling,  coring,  logging,  testing  and  completion  records;  all  production  records  showing  the  total  gross  production,  the 
quantities  saved,  sold  and  used,  the  disposition  thereof,  and  the  sales  prices  or  values  thereof;  all  production  sales 
contracts;  and  such  other  records  and  as  may  be  proper  for  the  settlement  of  accounts  between  Lessor  and  Lessee  or 


Page  4  of  6 


to  determine  the  respective  rights  and  obligations  of  said  parties  hereunder.  During  the  primary  term  of  this  Lease  and 
for  as  long  as  oil  and  gas  is  produced  therefrom,  and  for  a  period  of  one  (1)  year  thereafter,  Lessee  shall  make  all  of 
such  records  and  data  available  to  Lessor  or  Lessor's  designee  for  examination  and  copying  in  Lessee's  offices  at  ali 
reasonable  times,  as  well  as  all  other  records,  reports,  notes,  charts,  graphs,  maps,  contracts,  documents,  papers,  and 
other  material  in  the  possession  of  or  under  the  control  of  the  Lessee  and  pertaining  to  the  Leased  Premises. 


22.  Division  Orders.  It  is  agreed  that  neither  the  Lease  nor  any  of  its  terms  or  provisions  shall  be  altered,  amended, 
extended,  or  ratified  by  any  division  order  or  transfer  order  executed  by  Lessor,  Lessor's  successors,  agents,  or 
assigns.  If  Lessee  shall  require  the  execution  of  a  division  order  for  payment  of  royalty  payable  under  the  Lease,  then 
the  only  form  of  division  order  permitted  for  Lessee's  use  shall  be  such  form  promulgated  by  the  State  of  Texas  and 
set  forth  in  Section  91.402(d)  of  the  Texas  Natural  Resources  Code  as  amended  from  time  to  time.  Any  amendment, 
alteration,  extension  or  ratification  of  this  lease,  or  of  any  term  or  provision  of  this  lease,  shall  be  made  only  by  an 
instrument  clearly  denominating  its  purpose  and  effect,  describing  the  specific  terms  or  provisions  affected  and  the 
proposed  change  or  modification  hereof,  and  executed  by  the  party  against  whom  any  such  amendment,  alteration, 
extension  or  ratification  is  sought  to  be  enforced.  Any  purported  amendment,  alteration,  extension  or  ratification  not  so 
drafted  shall  be  of  no  force  or  effect. 


23.  Subordination  Agreement  Fees.  Notwithstanding  anything  contained  herein  to  the  contrary,  neither  Lessee  nor 
Lessee's  assigns  shall  ever  require  a  subordination,  partial  release  of  lien,  release  of  lien,  consent  or  other 
documentation  from  any  lender  of  Lessor  that  has  a  lien  on  said  land  as  a  condition  to  Lessor  receiving  any 
subsequent  royalty  payment,  unless  the  wellbore  penetrates  the  leased  premises,  in  which  case  Lessee  shall  notify 
Lessor.  However,  Lessor  will  cooperate  with  any  reasonable  effort  of  Lessee  to  obtain  same  from  Lessor's  lender  on 
behalf  of  Lessor. 


24.  Miscellaneous.  This  Lease  is  entered  into  in  the  State  of  Texas  and  shall  be  construed,  interpreted  and  enforced  in 
accordance  with  the  laws  of  the  State  of  Texas  without  reference  to  choice-of-law  rules.  Should  any  of  the  provisions 
herein  be  determined  to  be  invalid  by  a  court  of  competent  jurisdiction,  it  is  agreed  that  this  shall  not  affect  the 
enforceability  of  any  other  provision  herein  and  that  the  parties  shall  attempt  in  good  faith  to  renegotiate  that  provision 
so  determined  to  be  invalid  to  effectuate  the  purpose  of  and  to  conform  to  the  law  regarding  such  provision.  The  section 
titles  appearing  in  this  Lease  are  for  convenience  only  and  shall  not  by  themselves  determine  the  construction  of  this 
Lease.  This  Lease  may  be  executed  in  one  or  more  counterparts,  each  of  which  shall  be  deemed  an  original,  but  all  of 
which  shall  constitute  one  and  the  same  instrument.  Singular  and  plural  terms,  as  well  as  terms  stated  in  the  masculine 
feminine  or  neuter  gender,  shall  be  read  to  include  the  other(s)  as  the  context  requires  to  effectuate  the  full  purposes  of 
this  Lease. 

"The  rights  of  Lessor  under  this  Lease  shall  be  in  addition  to,  and  not  in  lieu  of,  all  rights  Lessor  may  have  as  to 
payment  of  royalty  under  Texas  law,  including,  without  limitation,  V.T.C.A.  Natural  Resources  Code  §§  91.401 
through  91.405." 

IN  WITNESS  WHEREOF,  this  Lease  is  executed  to  be  effective  as  of  the  date  first  written  above,  but  upon  execution 
shall  be  binding  on  each  signatory  and  the  signatory's  heirs,  devisees,  executors,  administrators,  successors  and 
assigns,  whether  or  not  this  ifsVh\as  been  executed  by  all  parties  hereinabove  named  as  Lessor. 


SE|^XHlBI 
LESSORS: 


TO  AND  BY  REFERENCE  MADE  A  PART  HEREOF. 


Byf^; 


Acknowledgments 


STATE  OF  TEXAS 
COUNTY  OF  TARRANT 


This  instrument  was  acknowledged  before  me  on  the      1  S    day  of  "'-V 


O-CCy  .  by 


""' ;" "'-    '•        ;  ''-■oiic,  Stare  of  ic- 
;~  !  '.'iVti'n'ssion  E>-oi"J.-- 


Notary  Public,  State  of  Texas 
Notary's  Name  Printed: 
Notary's  Commission  Expires: 


STATE  OF  TEXAS 
COUNTY  OF  TARRANT 

This  instrument  was  acknowledged  before  me  on  the. 


.  day  of . 


by 


Notary  Public,  State  of  Texas 
Notary's  Name  Printed: 
Notary's  Commission  Expires: 


Page  5  of  6 


EXHIBIT  A 


Attached  to  and  made  a  part  of  the  NO  SURFACE  USE  OIL  AND  GAS  LEASE  dated     /A^v      .  *  ^ 
2008,  between  Dale  Property  Services,  LLC,  as  Lessee,  and      jlobtck     C.   IWWcr-^-r-    ^  A  \~  c\  tv;  ir-Hy 

p     \  rr.tr-  ,  as  Lessor;  WITNESSETH: 

0.2T00  acres  of  land,  more  or  less,  being  BIk  4  Lot  3  Walnut  Creek  Connection  Addn,  an  addition  to  the  City  of 
Mansfield,  Tarrant  County,  Texas,  according  to  the  Plat  thereof  recorded  in  Volume  W~/7f    t  page  ~l\   t  plat  Records, 
Tarrant  County,  Texas. 


Page  6  of 6 


DALE  RESOURCES  LLC 

2100  ROSS  AVE  STE  1870  LB-9 


DALLAS 


TX  75201 


Submitter:  DALE  RESOURCES  LLC 


SUZANNE  HENDERSON 
TARRANT  COUNTY  CLERK 
TARRANT  COUNTY  COURTHOUSE 
100  WEST  WEATHERFORD 
FORT  WORTH,  TX  76196-0401 


DO  NOT  DESTROY 
WARNING  -  THIS  IS  PART  OF  THE  OFFICIAL  RECORD. 


Filed  For  Registration:      05/23/2008  10:56  AM 


lllllll  111!  EIIII  Hill  IIIBI  Hill  Hill  lilil  Ellll  Hill  Hi  lill 


D2081 93832 

ANY  PROVISION  WHICH  RESTRICTS  THE  SALE,  RENTAL  OR  USE 
OF  THE  DESCRIBED  REAL  PROPERTY  BECAUSE  OF  COLOR  OR 
RACE  IS  INVALID  AND  UNENFORCEABLE  UNDER  FEDERAL  LAW. 


$36.00 


Printed  by:  CN